Policy

International Tax - Policy

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1. Purpose and Objective

The purpose of the policy is to ensure the University complies with all relevant tax laws in the countries in which it operates.

2. Definitions, Terms, Acronyms

Certificate of Residency - a document issued by the ATO to Australian residents who require proof of their residency status. The certificate is valid for one year after the date of issue.

DTA - Double Tax Agreement

Permanent establishment - may arise where an Australian resident carries on business in another country or a non-resident carries on business in Australia.

3. Policy Scope/Coverage

This policy applies to all University staff and controlled entities which are involved in transactions or agreements that may have international tax implications.

4. Policy Statement

The University is a resident of Australia for income tax purposes and is an income tax exempt body under the Income Tax Assessment Act 1997. However, the University may not be a tax-exempt organisation in a foreign country.

The University will comply with all relevant taxation laws, regulations, rulings, policies and procedures in the countries in which it operates. The University will comply with reporting obligations for relevant taxation laws in the countries in which it operates.

When entering into international arrangements with non-Australian resident organisations or individuals, it is important for the University to consider the provisions and the implications of:

  • Australia's taxation laws;
  • the taxation laws of the relevant foreign country; and
  • the Double Tax Agreement between Australia and the relevant foreign country.

Failure to consider the above can result in material taxation risks and/or breach of international taxation law.

5. Roles and Responsibilities

Finance Officers (and equivalent) are responsible for considering the provisions and implications of the tax laws explained in this policy and for seeking the appropriate information and/or advice from, but not limited to, the suggested resources or avenues proposed in this document prior to entering into international arrangements with non-Australian resident organisations or individuals. If you have any concerns regarding international tax and the provision of services in a foreign country, it is strongly suggested that you consult with the Taxation unit of FBS at fbs-tax@uq.edu.au before entering into any formal arrangements.

The HR Division is responsible for considering the implications of international tax that may apply when employing or hiring a non-Australian resident individual. The assessment of residency status for income tax purposes is also the responsibility of the “natural person” or “entity” as explained in Section 6 of this document.

The Taxation unit of FBS is responsible for providing assistance to University employees or controlled entities when the matter in question is within the scope and capacity of the Taxation unit. When it is deemed appropriate, advice from an external taxation consultant will be sought.

6. Residents vs. Non-Residents

Determination of residency status is to be made by the individual, controlled entity or the third party being dealt with and not by the University.

A “non-resident” under Australia's domestic tax law is a natural person or an organisation that is not a resident of Australia.

A natural person is a “resident of Australia” under Australia's domestic tax law if he or she meets one of the following:

  • the person resides in Australia, within the ordinary meaning of that expression (i.e. to live in Australia permanently or for a considerable time);
  • the person is domiciled in Australia (unless the Commissioner of Taxation is satisfied that the individual's permanent place of abode (home) is outside Australia). A person's domicile is the place which is considered by law to be the person's permanent home;
  • the person has actually been in Australia, continuously or intermittently, during more than one half of the income year (unless the Commissioner is satisfied that the individual's usual place of abode (home) is outside Australia and he or she does not intend to take up residence in Australia); or
  • the person is a member of a superannuation scheme established under the Superannuation Act 1990, an eligible employee for the purposes of the Superannuation Act 1976 or the spouse or a child of a person covered by either Act.

An entity will be a “resident of Australia” under Australia's domestic tax law if it is:

  • incorporated in Australia; or
  • if it is not incorporated in Australia, it carries on business in Australia and has either:

o      its central management and control in Australia; or

o      its voting power controlled by resident shareholders.

7. Permanent Establishment

Generally, if the University has continuous and regular activity in a foreign country, it may result in the University having a permanent establishment in that country.

The effects of such an establishment could have significant costs, such as, but not limited to:

  • Withholding tax on foreign-sourced income.
  • Obtaining advice on tax minimisation strategies in foreign countries.
  • Lodgement of annual tax returns in foreign countries.

8. Double Tax Agreements and Certificate of Residency

Australia has entered into DTA's with more than 40 countries.

DTA’s prevent double taxation and fiscal evasion, and foster cooperation between Australia and other international tax authorities by enforcing their respective tax laws.

A DTA Schedule is available on http://www.fbs.uq.edu.au/DTA.

As part of some DTA’s, if an individual or entity is certified as an Australian resident for income tax purposes and receives income from these countries, they can request the tax authorities of these countries to reduce their withholding tax or to exempt them from paying tax in these countries. They can do this by supplying a certificate of residency or status.

When making payments to a non-Australian resident individual for tax purposes each operational unit shall consider the DTA implications to ensure the University is compliant with any PAYG withholding/relevant tax obligations.

A request for a certificate of residency for The University of Queensland as an organisation can be submitted to the Taxation unit of FBS. The request should be emailed to fbs-tax@uq.edu.au and include the name of the country the certificate is for, any supporting documents and a brief explanation of why the certificate is requested.

The Taxation unit of FBS is not able to request for a certificate of residency for an individual.

9. Dealings with the United States of America

When doing business with the United States, the University is often asked to complete a W-8BEN Form. This form is used by the Internal Revenue Service (IRS) to establish if a non-resident entity should be subject to withholding tax in the United States.

For the University, a W-8EXP Form is to be used in lieu of a W-8BEN Form. This form states that the University is a “foreign-tax exempt organisation” in the United States and will minimise any withholding tax.

A request for this form is to be submitted to the Taxation unit of FBS by email to fbs-tax@uq.edu.au, together with the details about the work being performed in the United States and an explanation of why such work does not create a permanent establishment in the United States.

A signed W-8EXP Form will only be supplied if the work does not create a permanent establishment in the United States.

If the University is deemed to have a permanent establishment in the United States, withholding tax cannot be avoided and an annual tax return will need to be lodged.

Custodians
Chief Financial Officer
Mr Andrew Betts
Custodians
Chief Financial Officer
Mr Andrew Betts